Uralkali Agrees to Cut China Potash Fee, Industry Group Says

Jan. 9 (Bloomberg) -- Belarusian Potash Co., the trading
arm of Belaruskali and Russia’s OAO Uralkali, will cut prices
for Sinofert Holding Ltd. by $70 a metric ton after agreeing on
contracts with the Chinese importer, an industry group said.

BPC, as the trader is known, agreed to a first-half price
of $400 a ton, Wei Chengguang, president of China Potassium
Salts Industrial Association, said today by telephone from
Shanghai, citing Sinofert. Canada-based potash exporter Canpotex
Ltd. signed a similar deal with the Chinese company last month.

China and India, the two largest potash buyers, put off
purchases of the crop nutrient last year as stockpiles grew.
China’s $470-a-ton contract expired in June, while India’s $490-a-ton supply deal ended at the end of the first quarter of 2012.
Uralkali had expected to sign a new agreement with China by last
May, Chief Executive Officer Vladislav Baumgertner said Dec. 20,
conceding that both countries sought a “small discount.”

Canpotex, which trades potash produced by Potash Corp. of
Saskatchewan Inc., Mosaic Co. and Agrium Inc., said Dec. 31 it
agreed to sell 1 million tons to Sinofert at $400 a ton for the
first half, also representing a $70 discount to a March accord.

Power Balance

That deal, which fixed an “unexpectedly low price” for
greater volumes than last year, gave Uralkali less room for
maneuver in talks, Konstantin Yuminov, a Moscow-based analyst at
Raiffesen Bank, said by phone. “This may potentially lead to
the change of the power balance on the potash market,” he said.

Five companies account for about two-thirds of the world’s
exports of potash, a potassium-based compound that strengthens
plant roots and protects against drought. In October, Wei urged
China, which imports about a fifth of global shipments, to seek
lower prices, citing weaker demand and a buildup of stocks.
Uralkali said Dec. 20 it didn’t see prices falling below $400.

Uralkali dropped as much as 1.4 percent in Moscow today,
the biggest intraday decline since Dec. 21, and traded down 1
percent at 233.41 rubles as of 6:26 p.m. local time.

Contracts with China may affect talks with India because
Indian buyers “will clearly seek a price close to what the
Chinese received,” Mikhail Stiskin, an analyst at Sberbank
Investment Research in Moscow, said in a note.

Separately, Uralkali said today it had signed accords to
supply about 10 million tons of potash to Russian fertilizer
producers, including OAO Acron, OAO Uralchem and OAO PhosAgro,
through 2017.